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                                                                 2011 TAX DATA ORGANIZER


                                                                                                   RileyAccounting.net
                                                                                                   CPA, never under estimate the value.

                                                                                                   415 308-0678, Fax 415 704-3238
                                                                                                   PO Box 1146
                                                                                                   Sausalito, California 94966

                                                                                                   Robert Lee Riley, CPA, MBA-tax
                                                                                                   Lee@RileyAccounting.net

                                                                                                   Certified QuickBooks Pro Advisor



               * FILL THIS FORM OUT ON YOUR COMPUTER THEN EMAIL ME THE EXCEL FILE.*

    Index

     Section   Click on the underlined link to access the section.
        1      Important Notes
        2      General Questions
        3      Dependent Children and Other Dependents
        4      Estimated Tax Payments
        5      Interest and Dividend Income
        6      Other Income and Expenses
        7      Sale or Exchange of Property
        8      Contributions to Retirement Plans
        9      Moving Expenses
       10      Itemized Deductions
       11      Unreimbursed Business, Employee, and Career Expenses
       12      Travel Expenses Away From Home Overnight
       13      Auto Expenses - Taxpayer
       14      Auto Expenses - Spouse
       15      Income and Expenses from a Business
       16      Rental Property Income and Expenses
       17      Rental Property Income and Expenses, part 2




                            Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 1 of 19.
 Important Notes                                                                               Click here to return to index.   1

…every time you spend money use plastic, or on-line Bill Pay. Enter all transactions into QuickBooks
directly off credit card and bank statements, whether tax deductible or not - this discipline will prevent
lost tax deductions. Keep a yellow legal pad next to your telephone, and keep a diary of everything, do
not throw it away - this will help back up your auto and entertainment expenses.

…if you purchased goods free from sales tax (often over the Internet from out of state) please let me know.
...please keep me informed if your income increases significantly next year. Failure to pay
estimated taxes may result in large penalties.
…please be aware that you must pay 90% of your taxes by 4/15/0x of the subsequent year, and, if
your tax return is filed after 10/15/0x, then the penalty on any tax due is close to 100%.
...expenses paid for with a credit card are deducted in the year of purchase, not the year of payment.
So, kindly look at your January of next year credit card statements for purchases made in this tax year.
...I set up QuickBooks for free for any of my clients.
…let me know if you bought a hybrid car, you may qualify for tax credits.
…I prefer that you fill out this form in Excel and send it to me as an email attachment.
Please EMAIL, or, fax to me all documents such as W-2's, 1099's, etc. Email me to confirm receipt of your fax.
Please number each page of your fax, and make sure your fax machine confirms the number of pages sent.
I PREFER EMAILS RATHER THAN FAXES.
…when ever you send me a fax, please send it twice, and number each page.
…here are some useful web based tax planning calculators.                         Click here.
…here is a web link to some of the recent tax law changes.                        Click here.
…more questions? Here's a link to popular IRS Publications.           Click here.
… you may qualify for energy tax credits.                             Click here.
…caution! If you submit a QuickBooks file I will assume all deductions are tax deductible unless
categorized in the "Other Expenses" category.




                        Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 2 of 19.
 General Questions                                                                             Click here to return to index.         2
    Yes           No
                            Did you make energy improvements to your home, please fax me the cost details.
                            Did you take a homebuyers tax credit in 2008 or 2009?
                            Did your address, marital status, or the number of household members change?
                            Did any of your children have investment income?
                            Did you refinance your main or second homes and is the total debt more than
                            $100,000 greater than the total cost (including improvements)?
                            Is the total debt on your main, and second, homes greater than $1,000,000?
                            Did you, or your spouse, make a gift in excess of $13,000 during the year?
                            Were you involved, in any way, with foreign bank accounts, or trusts?
                            Did you have foreign earned income, or pay taxes to a foreign country?
                            Do you have more than $250,000 in a pension plan? Form 5500 may be due.
                            Did you pay $10,000, or more, in cash to any payee?
                            Did you buy a home this year, if so, please fax me the escrow?            Click here.
                            Did you pay $600, or more, to any individual, for services performed?
                            Did you have any casualty or theft losses?
                            Have you faxed to me all W-2's, 1099's, and K-1's for the year,
                             and confirmed the fax with an email to me?
Yourself                                   Spouse
                                                                                                 Name and Occupation
* see below                                *                                                     Social Security Number
*                                          *                                                     Date of Birth
                                                                                                 Daytime Phone
                                                                                                 Evening Phone
                                                                                                 Fax
                                                                                                 Cell Phone (important I have this)
                                                                                                 Email
                                                                                                 Address
                                                                                                 Address
* Leave blank if I already have this information.




                        Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 3 of 19.
 Dependent Children and Other Dependents                                                            Click here to return to index.             3
                                                Social                             Months lived                       Did you provide
                                                Security          Relation-        in your                            more than 1/2
Full Name                      Birth Date       Number            ship             home         Income                Support?




NOTE! Your live in parents may qualify if you support them.
Child care                                      Amount
was provided by                ID number        Paid              Address and telephone number



Note; employment tax returns are required if you paid for services provided in your home.
            P  Hire your children to help you with; job hunting, marketing, or simply to do work for your business. Pay them
            under $400 and no tax return is required. Their work must be "meaningful and substantive" according to the IRS.

    Click here for more information on employment taxes for household help.


 Estimated Tax Payments                           Do not include W-2 withholdings                   Click here to return to index.             4
Federal                                         State
Amount          Date                            Amount            Date
                                                                                            2011    1st Quarter
                                                                                            2011    2nd Quarter
                                                                                            2011    3rd Quarter
                                                                                            2011    4th Quarter
                                                                                            2010    overpayment applied to 2011

                                                                                       Balance due with prior year return; 2010
                                                                                       4th quarter 2010 state estimate due 1/15/11
            P   Pay your state FTB taxes in December for a current year itemized deduction.


 Interest and Dividend Income                                                                       Click here to return to index.             5
Please fax all of your 1099's, it is not necessary to list all interest and dividend income. Fax to 415 704-3238.
Name                           Relationship                         Your childrens' 1099 information is entered in this section.
                                                                   Interest/dividends received by you on behalf of another.
                                                                   Interest/dividends received by you on behalf of another.
            P   Tax free bonds are generally good investments only if your taxable income is quite high.



 Other Income and Expenses                                                                          Click here to return to index.  6
Amount                                                                                                Home energy saving improvements
                 State income tax refunds                                                             Unreported tip income
                 Unemployment compensation                                                            Penalty on early withdrawal of savings
                 Social security benefits - taxpayer                                                  Items purchased free of sales tax
                 Social security benefits - spouse                                                    Gambling and lottery income
                 Alimony received                                                  *                  Casualty loss, damage, theft, etc.
                 Alimony paid                                                                         Tuition and fees for college
* Please describe your casualty loss in the margin to the right.                                      Books for college




                             Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 4 of 19.
 Sale or Exchange of Property                                                                      Click here to return to index.             7
                                                                 Date             Date                               Sales          Gain or
Description                                                      Bought           Sold*            Cost              Price          (Loss)
Fax me broker's statements, etc., to 415 704-3238.




           P When you sell shares of stock, or a mutual fund, notify the stock broker, or fund company, and
  tell them that you wish to sell the most recently purchased shares. Those shares will probably have a
  higher cost basis - thus the taxable gain will usually be less.


 Contributions to Retirement Plans                                                                 Click here to return to index.             8
Taxpayer                                                                          Spouse
Amount         Date                                                               Amount           Date
                                IRA, regular*                                                                         IRA, regular*
                                IRA, Roth                                                                             IRA, Roth
                                SEP-IRA                                                                               SEP-IRA
                                Keogh                                                                                 Keogh
  CAUTION! IRA contributions are due April 15th. SEP/Keogh amounts are due by the extension due date.
  Roth IRA verses regular IRA - here is a good calculator.       Click here.
  The rules for IRA's are complex. Please consult me, or a financial planner, prior to making an IRA contribution.


 Moving Expenses                                                                                   Click here to return to index.             9
Mileage
                Miles from former residence to new job location                                         Click here for more information
                Miles from former residence to former job location                                                   about moving expenses.
Amount
                Expenses of moving household goods and personal effects
                Travel and lodging in traveling from old to new residence
                Employer reimbursements. Please include the statement from your employer




                            Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 5 of 19.
 Deductions                                                                                          Click here to return to index.                 10
Medical and Dental                   Click here for more info about medical deductions on the web.                                                 0.00
                 Medicine, drugs                                                      Doctors       Click here for more information
                 Medical insurance                                                    Other -                  from the IRS on medical
                 Medical auto miles                                                   Other -                  deductions.
                 Glasses and Dental                                                   Long term care insurance premiums paid
                 HSA Health Savings contributions                                     Medicare withheld from Social Security
Cash Contributions                                                 Noncash Contributions             show at 25% of cost
                  House of worship                                                    Goodwill                                        Click here
                  Other -                                                             Salvation Army                                  for more
                  Other -                                                             Auto and travel mileage                         charitable
                  Other -                                                             Other -                                         contribution
                  Other -                                                             Other -                                         info on the
                  Other -                                                             Other -                                         web.
          0.00   = Total                                                              Other -
...if you make a charitable contribution, you must have a cancelled check, or receipt from the charity.
...you can donate shares of stock you own to a charity. You avoid paying capital gains tax on the
 appreciation, and, you take a charitable contribution for the fair market value of the stock. These rules
 apply only to shares that you have owned for more than one year.
...itemized deductions, continued from previous page                                                                                  P
                                                                                                                                      Interest on
Taxes Paid                                                         Interest Paid                                                      a boat or
                  Real estate, main home                                  Home mortgage, first loan                                   mobile
                  Real estate, second home                                Home mortgage, 2nd                                          home may
                  DMV                                                     Points                                                      be
                  Sales tax on boat/vehicle/etc.                          Home equity credit line *                                   deductible.
                  State income tax, prior years                           Other -
                  Other -                                                 Other -                                                     P
                                           * Interest on up to $100,000 home equity debt is deductible and the                        Put your
Miscellaneous Expenses                              proceeds of the debt may be used for any purpose.                                 credit card
                  Investment seminars                                                 Tax return preparation fees                     & auto loan
                  Investment related travel                                           IRA fee, if paid by separate check              balances
                  Safe deposit box                                                    Gambling losses                                 on your
                  Legal fees                                                          Other                                           home
    Click here for info on income and deductions for investors.                                                                       equity line.
           P     Home equity interest not used to improve your home may be subject to Alternative Minimum Tax.




                              Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 6 of 19.
 Unreimbursed Business, Employee and Career Expenses                                                Click here to return to index.     11
           P   Deduct expenses for your business, job hunting, networking, and career advancement beyond the duties of
Yourself       Spouse        your current job. Here is a web link to help you find more deductions.    Click here
                                 Entertainment for business promotion, networking, job seeking, 50% deductible
                                 Meals as advertising expense, see tax tip...                   P If you offer meals to
                                 Education, seminars, books tuition                    the general public and the
                                 Computers and equipment                               business nature of your talk is
                                 Office expenses and supplies                          meaningful and substantive.
                                 Photocopy                                             Then, within limitations, the meal
                                 Job hunting costs, typing, etc.                       may be classified as advertising
                                 Postage and delivery                                  and is 100% deductible for the
                                 Fax and overnight mail                                cost of the recipients meal.
                                 Telephone, local and long distance
                                 Telephone, auto                                         Click here for more information
                                 Telephone answering machine or service                on entertainment expenses.
                                 Business gifts @ $25 per recipient                 P
                                 Tools, equipment, and specialized supplies            If your gift is used by many, such
                                 Costs of attending business functions                 as a fruit basket, then you may
                                 Renting facilities for meetings                       deduct more than $25.
                                 Casual labor
                                 Payments to family members such as children for business work done
                                 Dues, subscriptions, and professional publications
                                 Clothes cleaning if work conditions are dirty, and clothes damaged on the job.
                                 Cable TV, videos, DVD's, CD's if related to your work
                                 Safety clothes and uniforms                        P
                                 Employment agency fees                                Even if you have no receipts, you
                                 Word processing, typing, typesetting                  can take a tax deduction if;
                                 Printing, business cards/promotional items            the amount is less than $75,
                                 Taxi cabs and vehicle rentals for business            you know the amount, date,
                                 Union dues                                            payee, and the notation is
                                 Business use annual credit card fee                   reliable and not based upon
                                 Other -                                               guess work.
           P   If much of your time is spent on work, networking, job hunting, information gathering,                          0.00   0.00
  and career advancement, if you "live to work" then many expenses which may at first appear to
  be personal in nature, may in fact be perfectly legal tax deductions.
           P   If you have a boat or swimming pool, deduct the variable costs as entertainment or networking.
  Costs would include your daily out of pocket expenses for food, drinks, gas, etc. If four of ten people are
  business contacts, then deduct 4/10ths of your costs.




                             Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 7 of 19.
 Travel Expenses Away From Home Overnight                                                             Click here to return to index.   12
Yourself          Spouse
                                   Meals                P Meals eaten alone when traveling are deductible.                              0
                                   Auto gas and oil                       P
                                   Auto rentals                           Have you lost your receipts for travel meals?
                                   Auto repairs and supplies              Then take the daily meal allowance of $30
                                   Bridge tolls                           to $46 per day - let me know the number of
                                   Parking                                days and the city.
                                   Hotels and motels                      P
                                   Telephone                              Travel for investment purposes, such as
                                   Clothes cleaning                       looking at real estate to buy, is
                                   Haircuts                               deductible if you spend six hours or more
                                   Tickets for transportaion              of the day looking at properties to buy.*
                                   Tips to baggage handlers, etc.         P
                                   Magazines and newspapers               Travel for charitable purposes is tax
                                   Equipment                              deductible. Volunteer for a charitable event
                                   Photocopies                            or work such as a troop leader, archeological
                                   Gifts                                  dig, nature study, or church program, etc.*
                                   Postage and delivery                  *Caution; your efforts must be meaningful and
                                   Fax                                   substantive.
                                   Tools and supplies
                                   Casual labor
                                   Other -
           0.00            0.00
                  TAX RULES - VACATION AND BUSINESS TRAVEL
                  Is your trip for business or for pleasure, or a little of both. Here are the guidelines.
                  General theory; if you are an employee then you are job hunting and networking - if you are self
                  employed or in outside sales then you are developing strategic business relationships - or
                  you may simply be an investor looking at real estate or a business to buy. If you have no
                  restaurant receipts, then use the standard meal allowance of 30 to 46 dollars a day (call me).
                  Gather business cards, brochures, newspapers, advertisements, names, addresses and
                  telephone numbers of people you meet. Save the Sunday real estate section of the local
                  newspaper. Volunteer for local charity events, show up at Chamber of Commerce mixers.
                  Look for a business to buy. Talk to employment agencies, bankers, stock brokers and Realtors.
                  Take pictures of real estate properties that you look at. Participate in events with local fraternal
                  organizations or yacht clubs. Look for a conference room to rent by the hour. Buy a map and trace
                  your route around town. Go to an educational seminar. Use the Internet for research before you go.


                  If your presence is required at a specific event, then count the entire day as a business day.
                  Otherwise, you must spend a good portion of the day conducting business activities in order to
                  count the entire day as a business day. Business activities must be meaningful and substantive.
                  Other;
                  ...a cruise ship convention may be deductible on your tax return but the rules are complex.
                  ...if you take a trip overseas for less than 7 days, e.g. to Europe, the rules are less stringent if
                  you want to deduct the trip as a business trip.




                               Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 8 of 19.
 Auto Expenses - Taxpayer                                                                            Click here to return to index.          13
Auto #1
                              Description                                                           Date acquired
                              Cost                                                                  Date sold
                 Gas, oil, insurance, etc.                          Yes / No         *Weight of car over 6,000 pounds? See below
                 Repairs                                                              Business miles                          P 75% business
                 DMV                                                                  Commuting miles                            is normal for
                 Lease payments                                                       Personal miles                             many people.
                 Interest*                                                  0.00      =Total miles driven during the year
                 Parking, tolls, etc.                                                 Average daily round trip commuting distance
                                                                    Yes / No          Did you purchase this car with a home
Auto #2                                                                               equity line of credit?
                              Description                                                           Date acquired
                              Cost                                                                  Date sold
                 Gas, oil, insurance, etc.                          Yes / No         *Weight of car over 6,000 pounds? See below
                 Repairs                                                              Business miles
                 DMV                                                                  Commuting miles
                 Lease payments                                                       Personal miles
                 Interest*                                                  0.00      =Total miles driven during the year
                 Parking, tolls, etc.                                                 Average daily round trip commuting distance
                                                       Yes / No                       Did you purchase this car with a home
 Yes / No       Did you buy a hybrid vehicle this year?                               equity line of credit?
 Auto Expenses - Spouse                                                                           Click here to return to index.               14
Auto #1
                              Description                                                           Date acquired
                              Cost                                                                  Date sold
                 Gas, oil, insurance, etc.                          Yes / No         *Weight of car over 6,000 pounds? See below
                 Repairs                                                              Business miles                   P 75% business
                 DMV                                                                  Commuting miles                     is normal for
                 Lease payments                                                       Personal miles                      many people.
                 Interest*                                                  0.00      =Total miles driven during the year
                 Parking, tolls, etc.                                                 Average daily round trip commuting distance
                                                                    Yes / No          Did you purchase this car with a home
Auto #2                                                                               equity line of credit?
                              Description                                                           Date acquired
                              Cost                                                                  Date sold
                 Gas, oil, insurance, etc.                          Yes / No         *Weight of car over 6,000 pounds? See below
                 Repairs                                                              Business miles
                 DMV                                                                  Commuting miles
                 Lease payments                                                       Personal miles
                 Interest*                                                  0.00      =Total miles driven during the year
                 Parking, tolls, etc.                                                 Average daily round trip commuting distance
                                                                    Yes / No          Did you purchase this car with a home
                                                                                      equity line of credit?
           P    *Due to the Luxury Auto rules it can take 20 or 30 years to depreciate some expensive cars.
  But a car that weighs 6,000 pounds or more can be depreciated faster. For example, a Chevy
  Astro weighs between 5,900 pounds and 6,100 pounds depending on the model.
           P    Your Day Planner or Palm Pilot often will be the basis for reconstructing your auto miles. So post; people, places,
 phone numbers, and your shopping lists. Oil change receipts show mileage and are used by the IRS to calculate miles driven.
           P    If possible, your auto loan should go on your home equity credit line so the nonbusiness
  portion of the interest is deductible.




                              Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 9 of 19.
 Income and Expenses From a Business                                                                Click here to return to index.          15
                                                                   Business name                                                         0.00
                                                                   Address
                                                                   Address
                                                                   Main business activity
Penalties! Do not forget the San Francisco annual Business Registration;          http://www.sfgov.org/site/treasurer_index.asp
                Income/Sales (send me any 1099-K forms that you received for merchant sales income - this is very important).
                          P      Delay your year end income and billings and put taxable income into January of next year.
                Beginning inventory
                Ending inventory                                                  Tax ID number
                Merchandise purchases
                 Here is a web link to help you find more tax deductions…              Click here for a description of business deductions.
Expenses, also use unreimbursed employee expenses and travel schedules
             Advertising                                                    0.00
             Bad debts                                           Assets acquired
             Bank service charges                                                  Computers and printers
             Commissions                                                           Computer modem
             Dues and publications                                                 Cell phone
             Freight                               P                               Audio visual equipment
             Gifts @ $25 per recipient             Charge                          Equipment
             Health insurance                      credit card                     Furniture and fixtures
             Insurance                             expenses                        Library
             Interest                              prior to                        Software
             Casual labor *                        12/31 for                       Leasehold improvements
             Cleaning                              a current                       Commercial trucks
             Legal and professional                year                            Other -
             Meals and entertainment               deduction.                      Other -
             Office expense                                                        Other -
             Pension and profit sharing                                            Other -
             Rent                                                                  Other -
             Repairs                                                               Other -
             Supplies CAUTION! Computer monitor, printer, briefcase, etc. go under assets acquired.
             Taxes; property                                                       Items purchased free of sales tax
             Taxes; other                                        Office or storage in home*
             Telephone                                                             Business use of home in %
             Travel, see the page for travel expenses                              Rent
             Utilities                                                             Home maintenance
             Wages                                                                 Utilities and insurance
             Pension plan bank fees and startup costs            P
             Taxi cabs                                            Deduct office in home expenses if
             Internet                                             you are using your home for storage of
             Other -                                              inventory, supplies, or business records.
             Other -                                                  Click here for more home office info on the web.
             Other -                                             Assets sold
             Other -                                                               Other -
             Other -                                                               Other -
             Other -                                                               Other -
             Other -                                                               Other -
 *** If your business is in an Enterprise Zone, you may qualify for a payroll tax credit. I do not check for this unless you ask me.
 *** Very important. If you have an S Corp., whenever you incur corporate expenses using personal money, you need to
   submit an expense reimbursement form to the corporation and be reimbursed for it.
 * Caution! If you are paying independent contractors you need to have them fill out an IRS form W-9.



                            Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 10 of 19.
 Rental Property Income and Expenses                                                                Click here to return to index.     16
Property #1                                                                                         Repairs with a useful life less
                                       Property address                                             than one year - deducted in full
                                       Property address                                                               Electrical
                Number of days of personal use during the year                                                        Structural
                Number of days rented                                                                                 Painting
                Rental income                                                                                         Roof
                                                                                                                      Plumbing
                Advertising expense                                                                                   Landscaping
                Auto miles driven                                                                                     Equipment
                Cleaning and maintenance                                                                              Other -
                Commissions                                                                                           Other -
                Condo fees                                                                                    0.00
                Insurance                                                                           Repairs with a useful life more
                Legal and professional fees                                                         than one year - depreciated
                Mortgage interest, first loan                                                                         Electrical
                Mortgage interest, 2nd                                                                                Structural
                Supplies                                                                                              Painting
                Property taxes                                                                                        Roof
                City license                                                                                          Plumbing
                Telephone                                                                                             Landscaping
                Utilities, gas, electric                                                                              Equipment
                PMI private mortgage insurance                                                                        Other -
                Other -                                                                                               Other -
 * Caution! If you are paying independent contractors you need to have them fill out an IRS form W-9.
Property #2                                                                                         Repairs with a useful life less
                                       Property address                                             than one year - deducted in full
                                       Property address                                                               Electrical
                Number of days of personal use during the year                                                        Structural
                Number of days rented                                                                                 Painting
                Rental income                                                                                         Roof
                                                                                                                      Plumbing
                Advertising expense                                                                                   Landscaping
                Auto miles driven                                                                                     Equipment
                Cleaning and maintenance                                                                              Other -
                Commissions                                                                                           Other -
                Condo fees                                                                                    0.00
                Insurance                                                                           Repairs with a useful life more
                Legal and professional fees                                                         than one year - depreciated
                Mortgage interest, first loan                                                                         Electrical
                Mortgage interest, 2nd                                                                                Structural
                Supplies                                                                                              Painting
                Property taxes                                                                                        Roof
                City license                                                                                          Plumbing
                Telephone                                                                                             Landscaping
                Utilities, gas, electric                                                                              Equipment
                PMI private mortgage insurance                                                                        Other -
                Other -                                                                      0.00                     Other -
          P   Move into your rental property for 2 years - you qualify for the $250,000/500,000 gain exclusion.
          P   Major repairs may be deducted in full if they are; documented separately as smaller independent, individual jobs,
     that are done separately, over more than one year, and, documents are worded as repairs, Tax Court memo 1956-261.




                           Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 11 of 19.
 Rental Property Income and Expenses, part 2                                                        Click here to return to index.     17
Property #3                                                                                         Repairs with a useful life less
                                       Property address                                             than one year - deducted in full
                                       Property address                                                               Electrical
                Number of days of personal use during the year                                                        Structural
                Number of days rented                                                                                 Painting
                Rental income                                                                                         Roof
                                                                                                                      Plumbing
                Advertising expense                                                                                   Landscaping
                Auto miles driven                                                                                     Equipment
                Cleaning and maintenance                                                                              Other -
                Commissions                                                                                           Other -
                Condo fees                                                                                    0.00
                Insurance                                                                           Repairs with a useful life more
                Legal and professional fees                                                         than one year - depreciated
                Mortgage interest, first loan                                                                         Electrical
                Mortgage interest, 2nd                                                                                Structural
                Supplies                                                                                              Painting
                Property taxes                                                                                        Roof
                City license                                                                                          Plumbing
                Telephone                                                                                             Landscaping
                Utilities, gas, electric                                                                              Equipment
                PMI private mortgage insurance                                                                        Other -
                Other -                                                                                               Other -
 * Caution! If you are paying independent contractors you need to have them fill out an IRS form W-9.
Property #4                                                                                         Repairs with a useful life less
                                       Property address                                             than one year - deducted in full
                                       Property address                                                               Electrical
                Number of days of personal use during the year                                                        Structural
                Number of days rented                                                                                 Painting
                Rental income                                                                                         Roof
                                                                                                                      Plumbing
                Advertising expense                                                                                   Landscaping
                Auto miles driven                                                                                     Equipment
                Cleaning and maintenance                                                                              Other -
                Commissions                                                                                           Other -
                Condo fees
                Insurance                                                                           Repairs with a useful life more
                Legal and professional fees                                                         than one year - depreciated
                Mortgage interest, first loan                                                                         Electrical
                Mortgage interest, 2nd                                                                                Structural
                Supplies                                                                                              Painting
                Property taxes                                                                                        Roof
                City license                                                                                          Plumbing
                Telephone                                                                                             Landscaping
                Utilities, gas, electric                                                                              Equipment
                PMI private mortgage insurance                                                                        Other -
                Other -                                                                      0.00                     Other -
          P   Move into your rental property for 2 years - you qualify for the $250,000/500,000 gain exclusion.
          P   Major repairs may be deducted in full if they are; documented separately as smaller independent, individual jobs,
    that are done separately, over more than one year, and, documents are worded as repairs, Tax Court memo 1956-261.




                           Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 12 of 19.
Tax Preparation Engagement Disclosure                   As required by the American Society of Accountants
    This disclosure is intended to confirm the terms of my agreement to provide tax preparation services
to you. Based upon the information you furnish to me I will prepare a federal income tax return, and a
state income tax return for the state of your residence. Please note that my services will be limited
to the preparation of the foregoing tax returns, and I will not be preparing other tax returns which you
may be required to file, such as returns for sales, unemployment, city taxes such as city payroll and
gross receipts tax, city business license taxes, workers' compensation, payroll, and excise taxes.
Nor will I be preparing tax returns and related filings for your pension plan(s), or forms 1099.
    In preparing your returns, I will not audit or verify the data you submit to me, although I may ask that
you clarify certain items. Because I will not be preparing an audit, my services cannot be relied upon
to detect thefts or embezzlements of your assets.
    Under the Internal Revenue Code and state tax laws, taxpayers are required to maintain records
supporting their returns, including receipts and canceled checks for all deductible expenditures. You
will be responsible for maintaining all necessary tax records and for the veracity and completeness of
the information submitted to me in connection with the preparation of the above referenced returns.
Please let me know if you would like me to advise you regarding your record keeping obligations.
    In order for me to complete your returns on a timely basis, I will need your supporting data no later
than one month prior to the due date of the returns.
    As a Certified Public Accountant, I am technically obligated to call to the attention of the taxing
authorities any positions taken in your tax return which the IRS has not expressly accepted. However, I
will resolve all questions involving the application of tax rules in your favor, provided, there is a
reasonable justification for it.
    Your returns are, of course, subject to review by the taxing authorities; and any items resolved
against you by the examining agent are subject to certain rights of appeal. In the event of an
examination, I will be available to represent you for an additional fee. Except as set forth below, my
engagement to prepare your taxes ends upon delivery of your tax returns. Any follow up services that
are required (such as representing you in an IRS audit) will be deemed a separate engagement and will
be governed by the terms and conditions of a subsequent engagement.
    ALTHOUGH I AM AVAILABLE TO PROVIDE YOU WITH TAX PLANNING ADVICE, I AM NOT
OBLIGATED TO DO SO UNLESS YOU SPECIFICALLY REQUEST IT. MOREOVER, IT IS MY POLICY
TO PUT ALL TAX PLANNING ADVICE IN WRITING; AND YOU RELY AT YOUR OWN PERIL ON ANY
ADVICE THAT HAS NOT BEEN FULLY REVIEWED AND PUT IN WRITING BY ME.
    The completed tax return is for government and your internal use only. Because it will not be prepared
in accordance with generally accepted accounting principles (but rather according to principles
specified in the tax code), it could be misleading and therefore may not be quoted from or copied and
provided to any other person without my written consent.
    As a result of my prior, or future, services to you, I may be required or requested to provide
information or documents to you, or a third party, in connection with a legal or administrative
proceeding in which I am not a party. If this event occurs, my efforts in complying with such requests
or demands will be deemed a part of this engagement and I shall be entitled to compensation for my time
and reimbursement for my reasonable out of pocket expenditures (including legal fees) in complying
with such request or demand. This statement is not intended to relieve me of my duty to observe the
confidentiality requirements of my profession.
    Any information we collect and maintain in the course of responding to you will be
handled in accordance with the access and privacy protection requirements of the Privacy
Act, and the Internal Revenue Code.
    We will not share the information you give us with anyone unless required by law. We
also will not sell your information.
    I may prepare an annual pension or profit sharing plan reporting statement for you such as form 5500,
or 5500EZ - nevertheless, I am not the Plan Administrator and am not responsible for the Plan terms,
administration, employee accounts, employee qualification, or IRS Plan qualification issues.
    You, the tax payer are ultimately responsible for all your tax filing due dates, and extensions, and, I will
need your complete and final tax information well in advance of any tax filing deadline.
Kindest regards,            Robert Lee Riley
                        Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 13 of 19.
 Tax Notes...                                                                                   Click here to return to index.   18
CAUTION!      Never trade in a car. It is better to sell and buy in separate transactions. You want
to write off the remaining depreciation on the old car. A trade in qualifies as a like kind exchange and you
lose the deduction for the undepreciated cost basis. Remember, a car that weights less than 6,000 lbs.
may take 20 years, or more, to depreciate. The dealer can write up separate transactions for the buy/sell.
Furthermore you cannot take section 179 bonus depreciation on any roll over.

...IF YOU ROLL OVER PENSION FUNDS TO AN IRA, DO SO WITH A CHECK MADE OUT TO THE IRA
ACCOUNT, NOT TO YOURSELF INDIVIDUALLY. THIS PROCEDURE WILL AVOID BACKUP
WITHHOLDING. Backup withholding will require you to make up the difference using personal funds.

...rental property that you own and manage yourself is still one of the best tax shelters for households with
income of about $100,000 or less. You may deduct up to $25,000 per year. Disallowed losses offset
any gain on sale.

...if you have a business, the IRS will require that you be able to reconcile the total of the deposits
made into all of your bank accounts, with your income as reported on your income tax returns.
So keep good records of any transfers into your bank accounts that are not taxable income.

...in some cases, you can borrow from a 401k to purchase a home or second home, such as a house
at Lake Tahoe.

 SALE OF YOUR HOME
...the sale of your home may be tax free, up to a point. You still need to keep records of all improvements
and major repairs.
...you can rent out your home for three years, and still sell it tax free sometimes. You qualify for the
$250,000/$500,000 exemption if you lived in the house 2 of 5 years prior to sale. You must recapture the
depreciation if any.
...if you hold title to your home as community property. Then if one spouse dies the entire cost basis
steps up to the fair market value as of the date of death.
...if you own a home, but have room mates, try to adjust the personal and rental portions of the house
to best take advantage of the $250,000/500,000 home sale deduction.

 IRA'S

...if you are in a pension plan at work you can make a nondeductible IRA contribution, or a Roth.
...you can use funds from an IRA to purchase your first home. Also, you may use funds from a 401k in
certain circumstances. Roll over funds from a 401k into an IRA and then purchase the home. $10,000 only.
...Roth IRA. Contributions are not deductible, benefits are tax free. Often they are a good idea if you
qualify. You can contribute each year. For joint filers, if your Modified Adjusted Gross Income is above a
cetain amount then your Roth contribution is limited. The limit is varies each year. You can make
a spousal Roth IRA contribution, subject to the spousal IRA rules, and you can make a Roth contribution
if you are in a pension plan at work.
...as a general rule, if you expect to be in a high tax bracket when you retire and do not
expect to need the money for 10 to 15 years then you may come out ahead with a Roth IRA.
...taxpayers age 50 and older can make annual catch-up contributions to a Roth or
traditional IRA.




                        Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 14 of 19.
 Tax Notes...                                                                                  Click here to return to index.   19
 AUTOMOBILES
...Interest on car loans. If you are an employee, you cannot deduct any interest paid on a car loan. This
interest is treated as personal interest and is not deductible. If you are self-employed and use your car
in business, then part of the interest is deductible. Always, if possible, put the auto loan on your home equity
line of credit.
...if you write off your car using the standard mileage rate, you may still have a tax loss upon the
eventual sale. The IRS publishes a table of depreciation per mile.
...sometimes, if you have an inexpensive car that you drive many miles, it may be more advantageous
to use the standard mileage rate. This also applies to leased cars.
...if you lease a car and pay a large up front fee, that fee must be written off over the life of the lease.
Caution, do not let the salesperson tell you that you are getting a big tax break.

 NET OPERATING LOSS
...if you are starting a business, you may be able to carry back your net operating loss to a prior year
when you have income. Carry it back 2 years and forward 20. The carry back period for a farming loss
(e.g. a vineyard) is 5 years.

 ACCOUNTING METHODS
...if you have an inventory the IRS requires you to use the accrual method of accounting. A common
misconception is that you must use the full accrual method, which means that you pay tax on your
accounts receivable even though you have not yet collected the money. Actually, all you are required
to do is to accrue the inventory - thus, you cannot deduct the cost of your inventory until it is sold.
This method of accounting is called a hybrid-accrual accounting method.

 S CORPORATIONS
...deductions are allowed for accident and health plans, and the first $50,000 of group-term life insurance.
Meals and lodging furnished for the convenience of the employer, are only available to employees
owning less than 2% of the corporations stock.
...CAUTION! If the business borrows, and loses, money. Your losses will be limited to your basis. Basis
is limited to the amount of money you have invested in the corporation not including debt assumed. Thus
S Corps are often not suitable for real estate, and start up ventures that borrow a lot of money.
...nonresident aliens cannot be owners.
…contact a lawyer to follow the corporate formalities if you want the corp. to shield you from liabilities.

 C CORPORATIONS
…contact a lawyer to follow the corporate formalities if you want the corp. to shield you from liabilities.
...CAUTION! Do not have the corporation own your car. Instead rent your car to the corporation. If the
corporation owns the car, the IRS will often classify personal use as dividend to the stockholder.
Thus, there is no deduction to the corporation, and taxable income to the stockholder.
...C Corporations are not usually suitable for professional service businesses, due to the increased tax
rate.
...often, stockholders will try to adjust the C Corp. earnings to zero each year. Often, a small loss is
incurred. Federal loss carryovers may apply to the subsequent years, but California loss carryovers are
permanently reduced by 45%.
...if net income is realized by the corporation, then you will be double taxed, once at the corporate level
and then once again when the money is distributed out of the corporation to the shareholders.
...often, the sole reason someone will use a C Corp. is to gain the deduction for health insurance. Now
that 60% of health insurance deductions are available to all self employed taxpayers, this advantage is
somewhat diminished.




                       Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 15 of 19.
 Tax Notes...                                                                                  Click here to return to index.   20
 LIMITED LIABILITY COMPANY
           P Should you switch from an S Corp to a LLC? If you expect the corporation to accumulate
 substantial assets, the answer is generally yes. Also, if you expect losses from operations, or from
 real estate, then the answer is probably yes.
...with a LLC, you are still liable for your own malpractice, but you may be shielded from liabilities
that arise from the errors of your business associates, co-owners, employees, etc. Under California
Law you are jointly and severally liable if your are anywhere in the chain-of-production. A LLC might
protect you from errors of others, or at least limit your liability to the assets in the corporation.
...a corporation may make your services more marketable to employers. For example, if you are working
on a time consuming job, the employer may be required by law to classify you as an employee, but if
you are incorporated you are exempt from payroll taxes, pension requirements, some labor laws, etc.
...there are no tax free reorganization provisions applicable to changing from a C or S corporation to
a LLC. If you are considering changing your corp. to a LLC, the timing of the transaction is important.
...in general terms, the advantage of the LLC is that losses flow through from the corporation to your
personal return in excess of your basis, or the original amount you invested in the LLC. Thus, LLC's are
often the preferred choice for a startup business that may lose money in the initial years, or, for a business
that might someday invest in real estate, or, for any business that may have a loss year.
...distributions of assets in the LLC to shareholders are generally not taxable to the LLC, similar
S Corp distributions can be taxable. Thus, if a shareholder wants to sell his, or her interest in a LLC
the tax may be less than what you might pay with an S Corp.
...your liabilities are limited to the assets of the corporation. There must be sufficient assets
in the corporation to meet the reasonable financial needs of the business - if not the LLC
offers you no protection.
...an LLC allows special allocations of income and deductions to the owners - big advantage over S-corps.
...LLC's are often used in real estate because the real estate loans are included in your
basis, so depreciation deductions may flow through. The LLC is taxed like a partnership.
...a LLC allows you to give away shares of stock to employees and family members.

 LIMITED LIABILITY PARTNERSHIP
...an LLP is designed for a professional practice.
...LLP's are often subject to specific state laws, such as a requirement for malpractice insurance.

 SEP PLANS
...simple. You can make contributions for yourself and your employees without a lot of complicated
paperwork.
...you can make contributions to an annuity within the SEP.
...each account is owned and controlled by the employee.
...eligible employees are generally those who have reached age 21, and have worked for you 3 years.
...the contribution limits are 25% of W-2 income or 20% of self employment income, up to the limit.
...SEP contributions are not included on the W-2.
...these plans must be set up by the due date of the return, including extensions.
...retirement plans, continued.




                       Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 16 of 19.
 QUALIFIED PLANS
...sole proprietorships use a qualified plan called a Keogh. Corporations use corporate qualified plans.
...Money Purchase Plans. Contributions are not flexible. Generally they are 10% of income or compensation
within limitations. You may, of course, terminate the plan if it is not possible to fund the plan.
...Paired Pension and Profit Sharing Plans. These are popular. Contributions are 10% and 15%. There
is a netting effect so the contribution is limited to 20% up to certain limitations.
...one participant plans with assets less than $100,000 are not required to file form 5500.
…Profit sharing plan contributions are now 25% of W-2 income or 20% of self employment income.
...eligible employees are over age 21 and have at least one year of service.
...Defined Benefit Plans. These allow you to make large contributions, if you are older.

 INCENTIVE STOCK OPTIONS
...if you sell your options via a cashless transaction, then you will generally pay tax at the highest rate.
You want to pay tax using the capital gain rates verses the ordinary income rates.
 TAX TIP AND CAUTION!                      It is tempting to simply cash in your options via the cashless trans-
 action method. Try to avoid that method because you are paying tax at the highest rate.
...you can make the Section 83(b) election for restricted shares - shares that have not yet vested, or are
still in a lockup period. The election will trigger a tax bill. You pay tax on the difference between the
current value of the shares, less the price you pay for the shares under the terms of the option.
...CAUTION! If you are holding shares in a brokerage account, do not change the name of that account
to that of a revocable trust - the stock broker will send a 1099 to the IRS as if you had sold those shares.
...you need to know if it is possible to exercise your unvested options.
...your employer will have a booklet that explains the nature of your options - I need to see that book.
...the first issue is whether you have Qualified ISO's (quals) or Nonqualified Options (nonquals).
...if you are short of cash, then cash in some of your options via the cashless transaction method. Use
that cash to purchase stock under the terms of the option.
...if you have qualified options, then you may exercise your options, but you do not pay the full
capital gains tax until you sell the stock in later years.
...generally, if you have nonqualified options, exercise those first and generate some cash. Use the
cash to purchase the qualified options. Hold the "quals" in your stock brokerage account and pay the
long term gains tax in later years.
...exercising your options can be very risky. If the stock falls below your purchase price under the
option agreement, you sustain a loss.
...there are three main issues; 1) you expect the stock to appreciate after the exercise, 2) you expect to
hold the shares you bought for at least a year, and 3) there is little chance that the stock price will crash.
...nonquals; ordinary income, compensation, is the difference between what you paid for the stock and the
fair market value at the date of exercise. For example, you paid $1 per share under the terms of the option
and the FMV is $12 on the exercise date, then you have $11 of income taxed at ordinary income rates.
The 83(b) election helps you here - you exercise your options now, for tax purposes, even though they
are not yet fully vested, or the lockup period still is in effect. You pay the tax on the difference between
the price paid and the FMV on the 83(b) exercise date. Hold for a year and pay only 20% federal tax.
It is possible to see your tax bill cut in half. Caution, do not quit your job before your shares have vested.
You have paid the tax already.
...alternative minimum tax. ISO's can be subject to ATM. I have a computer program that calculates the
rate at which you can exercise the ISO's, per year, in order to minimize the ATM.
...Incentive Stock Options. When you exercise, it is a nonevent for tax purposes, except for ATM. The
83(b) election does not apply. You must have the money to buy the stock under the option agreement.
...incentive stock options, continued.
...AMT, on "ISO-quals" applies to the difference between the FMV when restrictions lapse and the exercise
price (the price you paid for the shares). You can avoid the AMT by making the 83(b) election. Try to
exercise when there is little, or no, difference between the FMV and the exercise price, and then make
the 83(b) election. Regular tax is normally zero and the AMT income is small enough to have no effect.
...it is necessary to file the election statement before, or within 30 days, of the date of transfer of the shares.
You must also give a copy of the election statement to your employer.
                        Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 17 of 19.
 LIFE INSURANCE
Life insurance is used to provide for your children, or spouse, pay estate tax,
provide cash for your small business after your death, and to supplement your retirement income.
TERM INSURANCE. Generally only about 2% of term policies ever pay off. After the term
expires, the cost of continuing the coverage is often prohibitive. Term insurance has no cash
surrender value so it will not supplement your retirement. Often term insurance is used by
banks to guarantee a bank loan.
FINANCIAL PLANNING TIP!                   Some will say "buy term insurance and invest the
 difference yourself." Often though, you spend it instead of save it. Then the policy expires
 and it is prohibitive to obtain a new one. You may never see any of your money again.
FINANCIAL PLANNING TIP!                   Buy term with a rider that allows conversion to whole life.
WHOLE LIFE INSURANCE. It has a cash surrender value that you can access tax free when
you retire. The policy lasts your whole life and will pay for itself after a while. You are given
a guaranteed rate of return plus a percentage of the profits/dividends of the insurance
company.
 FINANCIAL PLANNING TIP!                  If you are married you may be drawing a pension over
 your life or the joint life of you and your spouse. For example, the single life pension may
 pay $5,000 per month, and the joint life pension may pay $3,000 a month. It may be best
 to elect the single life pension and then buy a whole life policy that will provide money to
 the spouse who lives longer.
VARIABLE UNIVERSAL LIFE VUL. You can select the investments in the policy to a
certain extent. Use the cash surrender value to supplement your retirement income. You
borrow against the cash surrender value and pull the money out tax free. That loan is then
paid off upon the death of the insured.
FINANCIAL PLANNING TIP!                   The problem facing many people is that they will
 outlive their savings. An annuity will keep paying monthly for as long as you live.
SPLIT DOLLAR LIFE. The employer and the employee both pay the premium. The employer pays
most, or all, of the policy. The employee receives a fringe benefit of life insurance coverage.

 LONG TERM CARE
...the Health Insurance Portability and Accountability Act of 1996 set the standards for long term care.
...43% of Americans will spend some time in a nursing home over age 65 (Journal of Financial Planning).
...the cost of long term care is $40,000 to $100,000 per year (The Wall Street Journal).
...Medicare does not pay for custodial care which is what most seniors need.
...Medicaid will not pay until virtually all of your assets have been wiped out.
...the biggest threat to your financial security is the cost of long term nursing home care (Modern Maturity).
...look for a policy that will allow you to stay in your own home.
...look for an inflation provision.
...make sure Alzheimer's is covered.




                       Copyright; Robert Lee Riley, CPA, MBA-tax. See tax return engagement disclosures. Page 18 of 19.

				
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